New Agreement for the Elimination of Double Taxation between Cyprus and Egypt
The revised Treaty, which is based on the new OECD Model Convention and on the UN Model Tax Convention incorporates the latest international standards with regards to exchange of information, mutual agreement procedure, as well as a principal purpose test and is expected to promote and strengthen the development of the commercial and economic relationships between the two countries and of course to boost their cooperation in tax matters.
The main provisions of the revised Treaty are as follows:
Dividend income (Article 10):In all cases the withholding tax is 10%. A 5% withholding tax will be applicable in the case when the recipient beneficial owner of the dividends is a company (other than a partnership) holding directly at least 20% of the capital of the dividend-paying company for at least 1 year prior to the date of payment of the dividend.
Interest income (Article 11):Withholding tax of 10% of the gross amount of the interest is applicable if the recipient of the interest is the beneficial owner of such income.
Royalties (Article 12):Withholding tax of 10% of the gross amount of the royalties is applicable if the recipient of the royalties is the beneficial owner of such income.
Offshore activities (Article 22):The provisions of this Article shall apply notwithstanding any other provision of this Agreement. One of the important provisions of this Article is that an enterprise of one of the two countries which carries on offshore activities in the other country shall be deemed to be carrying on business in that other country through a permanent establishment situated therein, provided that the offshore activities are carried on for a period of at least a total of 30 days during the related fiscal year.
Another important provision is the definition of the term “offshore activities”: they are activities that are carried out in one of the two countries in relation to the exploration and/or exploitation of the seabed and the subsoil and their natural resources situated in that country, and includes the installation and exploitation of pipelines and other installation under or above the surface of the sea.